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ECONOMY

Comprehensive futures trading services start in Japan

  • July 27, 2020
  • , Jiji Press , 8:02 p.m.
  • English Press

Osaka, July 27 (Jiji Press)–The Osaka Exchange started to offer commodity futures trading services on Monday, on top of the stock and bond futures already in its lineup, becoming Japan’s first exchange to handle a full range of futures products to improve convenience for investors.

The OSE, which is under Japan Exchange Group Inc. <8697>, or JPX, took over gold and other precious metal futures, farm products futures including corn, and rubber futures from the Tokyo Commodity Exchange (TOCOM), also a JPX affiliate.

JPX is seeking to revitalize the shrinking commodity futures market by attracting new investors by improving access. An investor can now trade various futures products listed on the OSE through one account.

Previously, stock and Japanese government bond futures were traded on the OSE and commodity futures on TOCOM, supervised by different government agencies under different laws. Securities firms and futures trading companies faced different regulations, and investors had to open separate accounts.

The launch of full-fledged futures trading services by the OSE came after calls grew for rectifying the complicated system in Japan, with other countries ahead in forming comprehensive exchanges.

In addition, the size of the domestic commodity derivatives market in 2019 declined to less than 20 pct of the level in 2005, after regulations were tightened following a series of wrongdoings related to commodity futures transactions.

“We hope to double trading volumes in two or three years,” OSE President Hiromi Yamaji told a press conference on Monday.

Yamaji also said he aims for the OSE to take over remaining oil, electricity and other energy-related products from TOCOM.

Kosei Securities Co. <8617> has newly entered the exchange, while Nomura Securities Co. began accepting gold futures trading orders for institutional investors.

 

Yamaji said as many as 15 companies, including foreign firms, are expected to enter the market.

The benchmark June 2021 gold futures contract hit a record high of 6,594 yen per gram in Monday trading on the OSE, up 197 yen from the settlement price at the TOCOM on Wednesday, the final trading day on the Tokyo exchange. There was no trading on Thursday and Friday, for national holidays.

In line with the transfer of TOCOM’s key services to the OSE, Japan Commodity Clearing House Co., a TOCOM unit, was integrated into Japan Securities Clearing Corp., also in the JPX group.

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